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ANNOUNCER: From New York City, America's financial capitol, this is IN THE MONEY. JACK CAFFERTY, HOST: Welcome to the program. I'm Jack Cafferty. On today's edition of IN THE MONEY: Orange crunch. America's color- coded terrorist warning system costs big bucks, creates big worries every time it jumps. We'll hear from a critic who says the price for all of this is simply too high.

Plus, mad cow, all this crazy reporting. We'll crunch the numbers on the mad cow scare; see whether the biggest danger is the disease or the media coverage. Here's a hint: think media coverage.

And, true confessions: you'd busted cheating CEO, but do you slam a baseball great for lying? We'll look at the ongoing debate over Pete Rose and his admission that he's been lying about betting on the game for 14 years.

Joining me today, a couple of the IN THE MONEY veterans -- regular suspects, CNN correspondent, Susan Lisovicz. I mean that in the kindest way.

SUSAN LISOVICZ, CNN CORRESPONDENT: Of course, you do.

CAFFERTY: "Fortune" magazine editor-at-large, Andy Serwer.

And as we come at you on a Sunday afternoon, there is tightening in the democratic race for the presidential nomination. Howard Dean's lead not nearly what it was. In the latest CNN/"USA TODAY" national Gallop Poll, he leads General Wesley Clark by just 4 percentage points. I wonder what happened to all that early speed.

ANDY SERWER, "FORTUNE" MAGAZINE EDITOR-AT-LARGE: You know, some of this stuff though, Jack -- I mean, come on, it's us, it's the media, just doing all this stuff, anointing a frontrunner, I hate to point my finger at my brethren over at the news weeklies, but they anoint Howard Dean as the guy who's going to be our next president. I mean, Ross Perot was going to be our next president. We're still so far away -- so much can happen. I really think that at one point one of these guys like, Kerry or Gephardt might end up with the prize.

LISOVICZ: Right and -- you know, remember Howard Dean has got this huge war chest setting records so...

SERWER: Money. LISOVICZ: That's right.

CAFFERTY: Big bucks.

LISOVICZ: And that's why you need to run a campaign. It would seem to be more critical to Gephardt, in particular, Iowa, and doing well in Iowa.

CAFFERTY: You know, and far be it for me to defend the news media and their ability to sensationalize a story or get the early jump or try to guide a story to where they want it to go, but Howard Dean has done and said a couple things, coming from a far-left position of the Democratic Party, this nonsense about Osama bin Laden and whether or not he's guilty, of course, he's guilty. This deal he did with the confederate battle flag on the pickup trucks in the South. I mean, he's done some stuff that has created the impression that perhaps he's a bit of a loose canon. A guy like General Clark, on the other hand, proceeded as more perhaps towards the center of the Democratic Party. And, when it comes November, it's going to have to be somebody closer, whether Dean moves to the center or somebody already there, if they want to unseat President Bush.

SERWER: Well, one time the left did capture the nomination, and that was George McGovern, I mean, sometimes that can be a disaster for that particular party. Can it not?

CAFFERTY: Mondale, McGovern, Dukakis.

SERWER: Well, OK. We could argue about some of that.

CAFFERTY: But, you point is well taken.

All right. On to other things, on Friday the Department of Homeland Security lowered the national terror alert level from orange to yellow. For the reason that happened we are joined by someone who knows well of these things. Kelli Arena, my pal down there in Washington D.C. Justice Department correspondent.

Kelli, why did they decide to lower the level when we had been literally on pins and needles since the start of the holiday season?

ARENA: Did say that the holidays had passed, and as you know, there was some concern that the U.S. would be vulnerable over the holiday season due to some information that came in suggesting that there was this window of opportunity New Year's Eve, in particular, that was mentioned in some intercepts. So, that caused a level of concern, now that the holidays have passed, without incident, that's one reason. The second thing is that holiday's usually the holidays mean great -- big gatherings in certain locations, ball games and New Year's Eve celebrations, and so on. And so, because those two passed without incident, it was decided this was a good time to go back down to yellow, which still means, though, an elevated level of alert. So, we're not in the clear, just yet, and there's still a great deal of concern about the level of threat information that continues to come in, which remains pretty high, Jack, but is a lot less specific than we were seeing heading into the holiday season.

LISOVICZ: Hey, Kelli, it's Susan. And it is also good to see you, as well, echoing Jack's comments. Kelli, here in New York the officials say that New York City has remained on high alert since 9/11. Are you hearing that there are exceptions to this like, say, New York City, Las Vegas, L.A.?

ARENA: Well, what Secretary Ridge said on Friday was that -- that would indeed be the case, that there would be certain locations and certain sectors of industry that would remain -- what he said, it was at a higher level of vigilance than others. He didn't want to get into color codes and -- you know, orange versus yellow versus yellow plus, at the time, although reporters really did try to press him. It is our understanding that on the sector front, we'll see no-brainer aviation at a higher level of alert -- the areas around ports, nuclear power plants. As for locations, as you said, Susan, New York is sort of an entity on its own. It stays at a higher level in any case, but add to the list, Las Vegas, Washington, D.C., obviously, possibly Los Angeles. Information coming in on all of those locations over the past several weeks and months, so those would stay on sort of a yellow plus alert. Although Secretary Ridge would not publicly get into any details about which sectors or cities he was talking about saying that he really didn't want to go there, did not really want to alert the world. I mean, there's a real concern here, about revealing sources and methods of information. I mean, they don't want to let the terrorists know and the general population know, exactly what information they have and the level of specificity.

CAFFERTY: Going back to code orange over the holidays had some Americans seeing red, the terrorism alert system may come in five colors, but critics say it doesn't offer any helpful details like who wants to kill us and how they might go about it. It's also been called too scary, too expensive, too imprecise. However, there have been no other terrorist attacks, it should be noted, since September 11th of 2001. One of the biggest critics of the current system is senate democrat, Frank Lautenberg of New Jersey. He joins us now to talk a little bit about what he thinks of the shortcomings of the system and how it might be changed.

Senator, nice to have you with us, thank you.

SENATOR FRANK LAUTENBERG (D), NEW JERSEY: Thanks, Jack. It's a good opportunity to be here, because as you know, I'm sure, as the DHS reduced the elevate -- code level to yellow again, from orange, saying that things are somewhat easier, but what the mission is, frankly I'm not sure. As I studied this, I came to a conclusion that thus far the system is in place to protect government from -- immunize them from criticism, heaven forbid something goes wrong, as opposed to being of specific help to individuals. People don't know what to do. It scares the devil out of them, they call my office with questions about do I fly to Bermuda or do I cross the Washington Bridge to New York? It sets a tone that is frightening without giving any specific assistance. And, I asked for a report from the Department of Homeland Security and that was done in July and gave them enough time to give us a report on the efficiency of the system, it was due December 15th. They're violating the law by not complying and I'm going to be after them as soon as we get back, but they ought to tell us how good it is.

CAFFERTY: Senator, far be it for me to defend the government, because I tend to be on the other side of that in argument in most issues. But, it occurs to me, for example, you mentioned specifics over the holiday period. There were reports of bomb detection equipment being used in Time Square looking for possible radio active dirty bombs, we had the news of several international flights either being detained or turned around because of suspicious activity on the part of people who were aboard or thought to be involved with those flights. I got a sense, as a taxpayer, maybe a misguided one, that there were specific things going on. Is it just not enough, or what should we be doing differently?

LAUTENBERG: Well, I think what we have to do is be more specific about what it is. In Israel, for instance, they break the country up into regions. The U.K. used to do the same thing, I don't know whether they still carry that on, but at least to tell us where the focus is, as opposed to scaring everybody from New Jersey, New York to Montana or Wyoming where the threat is certainly substantially less. What should we do? The question is, how do we conduct ourselves? People -- I know a lot of people, who have canceled vacation plans, but I was recently on a vacation trip in the Caribbean area and the flights were full and people were going, but I understand that flights to Europe have been substantially reduced in terms of numbers of passengers.

SERWER: Senator, just to pick up where my colleague, Jack Cafferty, left off defending the government, and my question is here, giving them a break. I mean, you're asking them to defend a negative or prove a negative, if you will, Jack mentioned that -- that there haven't been any terrorist attacks, so can't you argue that the system has been incredibly successful?

LAUTENBERG: Well, if the system has been successful and 600 million people actually flew last year, what then -- what does this alert mean? I mean, we've had alerts elevated in the past, what does it mean? Do -- should people change their habits? Should people refrain from business, shopping, doctors, school, you name it? There has to be something that tells us, that OK, perhaps in the background there's -- and I don't deny there's been some good things I talked to the National Guard executive last week and I talked to the state police and the costs run up, the average city estimates, in a poll that was taken, that it would cost -- that it costs $70 million every week across this country.

LISOVICZ: Well, that's what I wanted to talk to you about, senator. It's Susan, here. When you -- the terror alert level is now down to yellow, but when you raise it, when the government raises it, there's a lot of money involved a lot of overtime.

LAUTENBERG: Absolutely.

LISOVICZ: Can you just, sort of, briefly walk us through what that means?

LAUTENBERG: Well, it -- the -- for instance, in New Jersey, the National Guard has a cost of $25, 000 a day, automatically, as soon as the elevated level goes into place. And as I mentioned, cities across the country, when polled, they were able to come up with a number of $70 million a week in extra expense. That's $3.5 billion a year, the whole budget for the Department of Homeland Security is $40 billion. Well, here we're using, in just these alerts, four-and-a-half -- three-and-a-half billion dollars a year. So, the costs are enormous, but there's a lot in hidden costs that frankly, cannot be estimated.

LISOVICZ: Well, and of course, but we have not had a terrorist attack, thankfully, since September 11.

LAUTENBERG: Right.

LISOVICZ: We'll leave it on that optimistic point. Senator Frank Lautenberg of New Jersey, thank you for joining us.

LAUTENBERG: Glad to be here, thank you.

LISOVICZ: Up next on IN THE MONEY: Find out whether your burger could bite back. We'll look at with the numbers say about the dangers you face from mad cow disease.

Also ahead, the big tech hit that just got smaller as Apple follows up its iPod with the mini model. We'll see how the stock is doing.

And, swinging wide or hitting the sweet spot. Baseball star, Pete Rose, admits he gambled on the game. We'll talk to one of the men to whom Rose lied about his betting. See whether that confession should put him back on track for the Hall of Fame.

(COMMERCIAL BREAK)

LISOVICZ: Americans with the help of the media are all worked up about mad cow disease. Just one sick cow in Washington State, last month, and the $40 billion beef industry is on shaky legs. But, our next guest says the risks don't even come close to matching the hype. David Ropeik director at Harvard Center for Risk Analysis says the U.S. is highly resistant to the spread of mad cow disease. He recently wrote "A Practical Guide for Assessing Risk" and he joins us today from Watertown, Massachusetts.

Welcome.

DAVID ROPEIK, DIR. OF RISK COMM. HARVARD CTR. FOR RISK: Thanks. LISOVICZ: Well, it's good to have you. You know, we're so fearful these days: Fearful of losing our jobs, fearful of flying planes, fearful of eating beef. Do you think the government's response to that one sick cow has been appropriate, considering the risks there's so many millions of cows and Americans are a beef-eating nation?

ROPEIK: Well, what's interesting to think about, when you ask the question about the government's response is when. Because, they did in 1997, what most of the other countries in the world did and that has what -- that is what has reduced the risk to dramatically low levels. They put a ban in place that says you can't ground up cow parts and feed them back to cows. That's how the disease spreads, that's what we learned in the U.K. That was an entirely appropriate response and terrific for protecting public health and by the way, the industry didn't like that very much because there were people making money from that process.

I think you probably, though, more talking about their response now, in many ways their response has been excessive compared to what the actual risk is. For example, they've agreed to take all downers, cattle that can't walk, for any reason, out of the food supply, so if a cow sprains its ankle, it can't be used as food. Well, that doesn't reduce the risk, but it feels reassuring to us. They've taken some other steps that do reduce an already low risk a little bit more. But, overall those steps have made too, because they have to reassure our sense of confidence in them. That's what makes us more or less afraid, more than the probabilities. The probabilities here are infinitesimally low, but if we don't trust the government to be doing all they can, we'll be more afraid. Well, by overreacting, in terms of the actual risk, they've reassured the public, and you can see that reassurance in the fact that most consumers are still consuming what they consumed before this started.

SERWER: David, I read here, I think, that you used to be a TV person, is that correct?

ROPEIK: I did, in Boston for 25 years.

SERWER: Yeah, you look pretty good at it.

ROPEIK: Thank you.

SERWER: My question is, can you grade the media, here? How much are we to blame or how good a job have we done at spreading the word or maybe even fanning the fears?

ROPEIK: Some of all of the above?

SERWER: Yeah.

ROPEIK: It -- I've watched the media coverage of this very closely and I've actually been, I don't know, pleased is too smug a word -- because, who am I to observe, right? There's been a lot of coverage of how the risk is low, pretty high up in the stories. That hasn't been played down, that perspective has been in there, however -- here's a great example of the "Boston Globe," I live in Boston, had a story a couple days after Christmas that said, "Meat has spread to eight states." Oh, my god!

SERWER: Meat?

ROPEIK: Yeah. Well, then, in the very first paragraph...

SERWER: How about all 50.

ROPEIK: Well no, this meat from this one cow. I'm sorry.

SERWER: Oh, I see.

ROPEIK: Spread to eight states. Oh my god. A banner headline, above the fold, lead headline, and then in the very first paragraph of their story they said meat is not a risk. So, why is it the banner headline? It's like saying -- you know...

CAFFERTY: Well, if they made that the headline, though -- if they made "meat is not a risk a headline, nobody'd (SIC) buy the newspaper.

ROPEIK: Well, there you go. That's the natural inclination, right? The Boston's want to sell a tomorrow's paper.

CAFFERTY: Sure.

ROPEIK: Now, I as a reporter, and you probably as an anchor person, you care more that your show gets a lot of attention or my story does, but not so much the profit of the corporations, but a good story still feels good to you or me. Right?

CAFFERTY: Yeah, but how...

ROPEIK: So, we will play up those elements and the press has done that some, but overall been pretty balanced.

CAFFERTY: How do you explain, though, the fact that a lot of foreign governments got scared to death over this revelation and immediately halted all beef meat imports from the United States? It happened in South Korea, it happened in Japan, and they're not going to resume them until their own inspectors come over here, apparently, and satisfy themselves that the problem is not what they perceived it to be. I mean, this scared the hell out of a lot of people that had no contract with the American news media, so to speak.

ROPEIK: It scared the hell out of a lot of people who had money at stake. Those bans are economic. They are perception based, absolutely, but economic. They're a leftover from the fears that grew out of the U.K. epidemic and then the spread in Europe, and so the best only way to protect was absolutely don't let a cow in from any place that has one case or any cow products. But, those are so that, for example, Australia, which is apparently mad cow free, can say, "we're still mad cow free, buy our cows." It's not really a fear thing, as much as it is their fear that their customers will perceive a risk and stop buying their cows. That's what that one's about, mostly.

SERWER: All right, David, we have to leave it at that. David Ropeik, director of Risk Communication at the Harvard Center for Risk Analysis. Thanks.

ROPEIK: Thanks for having me.

SERWER: Just ahead, Apple is hoping to keep its momentum from 2003 going into the new year, but is it a good investment for you now?

And, will Pete Rose's admission that he bet on baseball, get him off the bench and into the Hall of Fame? We'll talk about that with noted baseball writer, Roger Kahn. Stay with us.

(COMMERCIAL BREAK)

LISOVICZ: Now, let's look at the top stories of the week in our "Money Minute." Jury selection got under way, this week, in Martha Stewart's legal trial. Legal experts expect the process of finding an impartial panel will be difficult because of all the publicity surrounding the case. Stewart is accused of lying to investigators looking into whether her sale of ImClone stock was illegal insider trader.

2003 was a banner year for the big Japanese car makers, here in the U.S. Toyota boosted its market share more than any other Japanese of domestic car maker, while Honda also posted strong gains. Meanwhile, Detroit's big three auto companies all lost ground with Daimler-Chrysler suffering the most.

And, the price of prevention and prescription keeps climbing. The government says healthcare spending jumped nearly 10 percent in 2002, the largest increase in over a decade. Total spending hit $1.5 trillion, that's trillion with a "T," dollars. Hospital care and prescriptions drugs accounted for much of the increase which outstripped overall economic growth for the fourth year in a row.

SERWER: Apple computer is looking to extend the success of its portable iPod musical player. This week at the Mac World Conference, the PC pioneer, unveiled the iPod Mini. It'll be easier to carry and will sell for about 250 bucks, that's slightly less than its predecessor. The iPod and the iTunes system that makes downloading and buying music cheap and legal -- big thing there, gave Apple a nice boost in profits last year. And it shows in company's stock price. Apple shares were up about 65 percent last year, not bad. That makes Apple Computer our stock of the week.

And, I think the big news, you guys, is that Hewlett-Packard, this past week, announced it was going to making a device compatible with the iPod system. The first time another hardware manufacturer has made something that connects with Apple systems for as long as I can remember.

LISOVICZ: As opposed to...

SERWER: The Microsoft platform. LISOVICZ: But, you know, it's funny, I mean, when you think about Apple, it has such a frenzied following. At Mac World, Steve Jobs and Apple have some of the most mythical status.

SERWER: Right.

LISOVICZ: But this week was an especially important week. That iPod has been a great success for Apple, and of course, the HP thing was -- put the icing on the cake.

CAFFERTY: What is it, do you suppose, that Apple's able to do when it comes to music that they're not able to when it comes to selling their computers? They still only have five percent of the computer market and they've been trying to peddle those things for a long time.

SERWER: Well, I think one of the -- part of that, Jack, is the domination of Microsoft, but going back to Steve Jobs and his brain, I don't think there is anyone in America who understands technology and media and entertainment combined better than this individual. A lot of people like to knock this guy because he is a real maverick, sometimes hard to get along with, but in my mind, he is truly a business genius and a business visionary and a lot of the PC features and stuff from Microsoft come from him and Apple, don't they?

CAFFERTY: So, do you buy the stock?

SERWER: You know, over the long-term, I think this is a really kind of interesting play, because everyone keeps saying they're dead, they're dead, they're going to go away.

CAFFERTY: But, they're not.

SERWER: But, you know what? They're not going to go away unless, of course, Yoko Ono and the Beatles have their way, because those people are suing them over their name, which is just crazy.

I mean Yoko, what do you doing? You've got enough money, no one confuses your old record label, or the name of the company, Paul McCartney, Ringo, the richest man in the world...

CAFFERTY: You mean, Apple? The old Apple Record label?

LISOVICZ: Apple Records.

SERWER: They're suing...

CAFFERTY: Where's she been? Apple Computer has been around for a long time.

SERWER: Well, they have this old agreement, it goes back decades, and they sue them every once in a while because they get more of the music. It's just lunacy.

LISOVICZ: Well, I could see John Lennon, who was a great New Yorker with the iPod walking down the streets... SERWER: Oh, you better believe it.

CAFFERTY: Absolutely.

LISOVICZ: He was all about peace, he was not a confrontational guy.

SERWER: He'd love it. He'd love it. And it's such innovative, great company. You know, I like this thing, I'd like to see it around and it's kind of cool to see it out there.

CAFFERTY: But, Bill Hemmer of our morning program "America Morning," he's been walking around here with one of those iPod for a couple weeks and you can't even talk to him. He's got those earphones in his ears, he's got some old Dylan on there, and he's in heaven.

SERWER: You could put 10,000 songs and get rid of your whole CD collection. I mean, seriously, it's crazy.

LISOVICZ: Well, and, for us females -- you know, the mini iPod could fit in our purse. It's like the size of a business card holder. We like that.

SERWER: With your colors, too.

LISOVICZ: Oh, that's right, the cool colors. Yeah, exactly.

CAFFERTY: Or your shirt pocket, if you don't carry a purse (UNINTELLIGIBLE).

Coming up next, on IN THE MONEY: Insider baseball Pete Rose admits that he gambled on the game despite years of lying about it. We'll talk with one of the great baseball writers ever, Roger Kahn, author of "The Boys of Summer." He worked on Pete Rose's autobiography, asked him over and over again, "Did you bet on baseball?" Rose going, "Oh, no I never did that." We'll see what Mr. Kahn thinks about this latest admission.

And, the match that went up in flames. Jerry Levin helped put together AOL Time Warner, now there's a legacy. Find out how a mega- merger turned into a meltdown, in what arguably was one of the great, bad deals ever made. Stay with us.

(COMMERCIAL BREAK)

CAFFERTY: Pete Rose's new book hits stores this week, but so far it does not look like his admission that he bet on baseball is getting him anywhere. In fact, many of baseball gods translate that to baseball writers who vote on admission to the hall of fame seem even angrier at Rose than ever before.

One of the people who can't be too pleased is our next guest, author Roger Kahn. He is probably the most famous writer of the great American pastime of baseball in at least in our generation. His highly acclaimed book about the Brooklyn Dodgers "The Boys of Summer," required reading for any young kid who wants to learn about baseball. Mr. Kahn also co-wrote Pete Rose's auto biography, "Pete Rose: My Story," in 1989. That's the book where Rose denied betting on baseball. He lied in that book. Roger Kahn also holds the new (UNINTELLIGIBLE) in journalism (UNINTELLIGIBLE) upstate New York.

And it's a pleasure, Mr. Kahn, to welcome you to IN THE MONEY. Nice to see you.

ROGER KAHN, AUTHOR: Well, thanks so much for having me.

CAFFERTY: So this man, you sat down to do his book. He looked you in the face back in 1989 and lied to you and to everybody else about the fact that he broke one of baseball's cardinal rules, which is you don't bet on the games, particularly when you are managing a team. How do you feel about that admission today?

KAHN: Well, somebody asked if I felt betrayed. I don't feel betrayed. We weren't that close.

But I feel a little embarrassed. I spent three years running down a story, and the story turns out to be something else. If I asked Pete once, I asked him 20 times, "Did you bet on baseball?"

Pete's diction does not sound like Lawrence Olivier. So I'll tell you how he came back to me. He'd look at me, blink his eyes, and say, "I didn't bet baseball. I got too much respect for the game."

Well, that, of course, turns out to be totally untrue. It does not make Pete an evil person. It just makes him somebody with a lot of character deficiencies.

My strong feeling is that people have different licenses in life. You know, if a doctor abusing patients, he or she loses a license. If a pilot crash lands too often, he or she loses a license. Pete Rose has lost his license to be around baseball either in the hall of fame or with a managing or a coaching job.

And so I don't wish Pete evil at all. But I think he should stay away from baseball and spend the rest of his days as a shepherd.

LISOVICZ: Roger, with all due respect, I love baseball, I'm a Yankees fan. I live in Hoboken, New Jersey. Some people say that's where baseball started.

The baseball hall of fame is not made up of saints. Pete Rose was a great baseball player. He bet on baseball when he was managing the team. Can't he enter baseball, theoretically, baseball hall of fame, but be banned from the sport permanently?

KAHN: Well, there's an interrelationship between the hall of fame and what I call Baseball Inc. And there's called an ineligible list. And if you're ineligible to be in baseball, which Rose now is, then the hall of fame honors that and they don't want you in the hall of fame.

The point is, wasn't Ty Cobb a mean bigot? I enjoyed Cobb, but people say he was. Wasn't Babe Ruth an egomaniacal alcoholic? Probably so.

I'm not saying go back and look at everybody who has been inducted into the hall of fame from 1936 until today. That's impossible. You have racists in there, numbers of unpleasant people.

But we are in the present. And there is a statement in the hall of fame, what they are looking for, one thing they're looking for is character. So let's not get any more people in there who have serious character deficiencies.

SERWER: Roger, of course there are new allegations subsequent to Rose's admission that he is not coming completely clean, that there is actually more to his story that he is not fessing up to. But how do you think this will play out? I mean, do you think he will get in or not?

KAHN: I really don't think with his present attitude he's going to get in. Because instead of really saying, I am sorry, I've disgraced myself, I embarrassed the game that I claim to love, just lied to -- just through the book, he lied to me, lied to millions of people, little leaguers, adults, old people, I don't see that really sense of remorse, I have done a very bad thing.

And I don't -- unless that remorse comes through, I think Pete will stay on the outside. Signing his name at card shows, he won't starve. But he will not be welcomed in any baseball institution.

CAFFERTY: How did you react to the timing of the release of this book? Paul Molitor (ph) and Dennis Eckersly (ph), a couple of major leaguers who presumably played by the rules, were inducted into the hall of fame. And out comes Pete Rose's book at the very time those announcements are made.

All of a sudden, he's on a book tour. I mean, is it me, or does that seem just a touch cynical?

KAHN: Well, I think it's cynical. I think his public relations advisers have been pretty weak. Back in '89, there was just an army of journalists, while baseball was investigating him, and after baseball investigated him.

And there would be press conferences and Rose would say, I'll talk about the game, last night's game. Johnny Bench said to me, the great catcher, "If Pete didn't bet on baseball, why doesn't he simply say, I did not bet on baseball." He wouldn't say that.

Now we have installment two, I did bet on baseball, but I didn't bet against the team I was managing. What's ahead in installment three or four? Further confessions? So I look at this confessional as a book that I really -- I don't think I will read it.

But I'll tell you what I am going to read. I'm going to read the new confessional book by O.J. Simpson.

SERWER: That's a -- all right. Roger, we have to wrap it up on that note. Kind of a fun way to end it up. We are delighted to have you on the program. Roger Kahn, baseball historian and author of "The Boys of Summer" and the autobiography of Pete Rose. Also, (UNINTELLIGIBLE) chairman and journalism at (UNINTELLIGIBLE).

Thanks.

There's more to come on IN THE MONEY. Up next, from corporate hookup to head-on collision, we will hear from an author who chronicled AOL's disastrous match with Time Warner.

Also ahead, cash on the rebound. Find out why some of the Big Boards big names want Dick Grasso to fork over a few of his millions.

(COMMERCIAL BREAK)

SERWER: The merger of Time Warner and AOL sounded a little too good to be true, and it turned out a little too true to be good, if you follow. Steve Case and AOL paid $163 billion virtual for Jerry Levin's old school media assets at Time Warner. A couple years later, the former heavyweight stock was going for chimp change.

"Vanity Fair" contributing editor, Nina Munk, tells how it happened in her new book, "Fools Rush In: Steve Case, Jerry Levin, and the Unmaking of AOL Time Warner. She joins us.

Welcome, Nina.

NINA MUNK, AUTHOR, "FOOLS RUSH IN": Hello, Andy. Thank you.

SERWER: I'm really enjoying your book. I'm about two-thirds of the way through it. Why don't you tell us, first of all, what the heck went wrong here. I mean, this giant combination just flopped.

MUNK: Yes. I guess the real question is, what didn't go wrong? You know, I think from the gate, the most extraordinary thing I discovered when I was reporting this story is that, even before this deal was announced, everything that could be wrong was wrong. And all the signposts were there.

You had Steve Case and Jerry Levin already at one another's throats. You had a financial debacle in terms of how the deal was structured. You had two cultures that couldn't possibly work together. You had two companies that basically hated each other from the beginning. And it just was the most unlikely impossible combination.

LISOVICZ: Nina, there's no shortage of failed mergers and hubris. Executive hubris is often one of the culprits. I thought I knew everything about this merger since we work for the company. But the transformation of Jerry Levin, as outlined in your story, is just fascinating.

You had access to him. And I wish you could share a little bit from that experience. MUNK: Yes. I spent a tremendous amount of time with Jerry Levin. And to my mind, he is without doubt the most important character. I mean, my book, of course, is about the AOL Time Warner deal, but it's really a psychological profile of a man who single- handedly brought down and nearly destroyed a great institution.

And, as you point out, it's about hubris, it's about visions of grandiosity. It's about desperately wanting to leave behind a legacy to rival some of America's great empire builders, and all the while, of course, not paying any attention to his shareholders or his other stakeholders.

LISOVICZ: And now he is really living a completely different life out on the West Coast.

SERWER: Yes. He's all groovy and everything out there. I saw a picture of him. He has the home boy look with a black T-shirt, and the baggy jeans and the haircut.